Fiducitation: Cash Management Services
Author: Brian O’Keeffe
Date: January 7,
2002 © 2001 Fiducite.com, Inc.
Fiducitation: A
synthesis of public Internet resources on the topic.
Instructions: Use the Table of Contents to navigate the document. Each citation has up to four distinct parts: Annotation, Clip, Source, and Cached File. Our Annotation and Clip (text or graphic from source document) help you decide whether to view the document. The source document may be viewed by clicking on the Source URL or by opening the embedded Cached File. All information is attributed to its source.
This Fiducitation was prepared for the purpose of surveying
the cash services of the world’s major global custodians. I found that the services offered by the
major custodians do not vary tremendously.
Every custodian offers cash sweeping and pooling (although only Citibank
explicitly discusses notional pooling).
Further they tend to offer similar Money Market accounts for cash to be
swept into.
Every bank also pays interest on currency balances, although
none state explicitly how they calculate the rates. I found some information at Globalcustody.net discussing the
common practices of banks, and implying that interest is generally based on
some overnight rate (generally LIBOR). All of the custodians pay interest in
EUR, GBP and USD. Additional currencies
are considered a value added service (JPY and GDM are the most common), and
seem to be negotiated on an individual basis.
While I was able to uncover details of offerings, I was
unable to find any independent critiques of the quality of these banks
offerings. Global Investor and Global Custody have named BBH as the best FX
custodian for the past year, but there are no similar surveys that exclusively cover
cash management services.
Overview and General Information
Author:
Cash Management Overview
Annotation:
This
is a description of the function and major characteristics of cash management
services. This is useful, as it describes some “standard” services that any
good custodian will offer.
Clip: For idle cash balances, global custodians should pay
credit interest at a good rate, linked to a relevant market rate - at a
minimum, in most major currencies; ideally, across all currencies. There should
not be an unduly high balance requirement for a reasonable rate to apply.
Source: http://www.globalcustody.net/cash_management/
Cached
File:
The Cinderella of Europe’s Fund Markets
Annotation:
This
is a general interest article from Global Investor Magazine discussing the
explosion in size, scope and importance of Europe’s Money Market Funds. The article also predicts continued growth
in the same pattern of US Money Market Funds in the future.
Clip: In Europe, cash management’s new look comes largely courtesy of the money market fund. Money market funds are worth about $2.2 trillion in America, accounting for a third of all US cash deposits from both retail and institutional investments, the business virtually doubles in volume every year – hardly boring, or indeed poor.
Now Europe shows signs of following in the footsteps of the US, although at $92 billion the size of its money market fund sector pales in comparison. But European money market fund providers are all reporting exponential growth in demand, especially as many investors have gone overweight cash in the face of uncertain global markets.
Source: http://www.globalinvestormagazine.com/previousissues.asp
Cached
File: 
Cash Services Matrix
Annotation:
This
service matrix is helpful only in highlighting the homogeneous offerings of the
major banks. Note that every bank (except State Street) offers every service
that they have identified.
Source: http://www.globalcustody.net/cgi-local/showglobal.pl
Cached
File:
ABN-AMRO Mello Cash Services
Annotation:
This
is a brief product highlight detailing Mellon’s cash services. Like the other custodians, they offer
pooling and sweep services, but do not offer online FX trading or Money Market
trading.
Clip: ABN AMRO Mellon provides full cash management
services as part of its custody offering. These include: Online cash reporting,
cash forecasting, forex trading and cash sweep investment.
Source: http://www.abnamromellon.com/option2_Core
Custody.html - Cash Management
Cached
File: 
Bank of New York Cash Management Services
Annotation:
BoNY
offers similar sweeping and pooling services to the other custodians. They also
offer Money Market accounts in GBP, USD and EUR, but lack the ability to take
Money Market instructions through their online interface.
Clip: The Bank of New York offers a unique combination of
technology, products, services and expertise that allows us to deliver the
treasury management solutions your company needs. We provide a complete range
of treasury management services, with a dedicated focus you can only get from a
bank strategically committed to transaction processing.
Source: http://www.bny.com/pages/cgpscashmanagement.htm
Cached
File:
Bank of New York Foreign Exchange
Annotation:
Please
not the Internet Capabilities section. Only Northern Trust has FX trading
capabilities through an online interface like BoNY.
Clip: Clients can now trade exclusively online using iFX
ManagerSM, a web-based, fully automated FX trade order management
and execution system.
Source: http://www.bny.com/pages/cgpsforeignexchange.htm
Cached
File: 
Citibank Cash Management and Trade Services
Annotation: This brochure
details Citibank’s offerings. Citibank
highlights its ability to offer clients over 100 different local currency
accounts. They are also the only custodian to specifically mention notional
pooling anywhere in their service offering descriptions.
Clip: As our partner, you have access to our extensive local,
regional and global presence; our ongoing and significant investment in
sophisticated technology; our flexible and comprehensive investment and
liquidity management products and services; and the expertise of our people.
Source: http://www.citibank.com/e-business/homepage/downloads/pdf/inv_broc.pdf
Cached
File:
Author:
JP Morgan Cash Management and Liquidity Services
Annotation: JP Morgan
offers extensive and detailed cash services. Amongst the items you requested,
Morgan offers extensive pooling and sweeping services. Morgan’s FX
Trader allows for online execution of FX trades. While Morgan allows for
significant Online reporting, it appears that they do not allow for the
execution of Money Market trades through an online platform. Specifically, they
not how easy it is to make a trade with “one phone call to a Morgan desk”.
Clip: There’s no
off-the-shelf answer to optimizing the management of your liquidity. But at
JPMorgan, we know how to go about identifying and creating the right answer for
you. We work with you to define your goals and objectives. We then apply our
global experience and knowledge of regional and local markets to your situation
to develop informed and flexible solutions for your company. Take a look at how
you can benefit from having JPMorgan as your liquidity partner.
Source: http://ts.jpmorgan.com/cm/cs?pagename=Chase/Href&urlname=jpmorgan/cash/_pc_/li&cat=li
Cached File:
Author:
State Street Cash Management Services
Annotation: State Street
is not very clear about their specific service offerings, and according to the
matrix above from GlobalCustody.Net, they do not offer some basic services that
all of the others do offer (pooling, sweeping, interest of cash balances).
While it seems unlikely that they do not offer these services at all, I have
been unable to confirm that offer more than pre-authorized sweeping
services. State Street’s FX
capabilities do not include an online trading function for cash management
purposes, nor is there an online tool to make money market trades
Clip: At State
Street, we understand that cash management is an integral component of your
overall investment strategy. We have developed a full range of standard and
customized electronic and paper-based services designed to help you improve
yields, manage risk and achieve higher operating leverage.
Source: http://www.statestreet.com/stst/ssservice.nsf/Framesets/ServiceCashManagement?OpenDocument
Cached File:
Author:
Northern Trust Treasury Management
Annotation: Northern’s
sweeping and pooling services are in line with the others. However, unlike the
other custodians, Northern does offer online FX dealing through their FX
Passport application. In general, Northern has excellent functionality in its
online offerings, but does not offer online Money Market trading.
Clip: Northern Trust has over a century of experience in providing
sophisticated treasury management tools to business—from traditional payroll
and lockbox services to innovative solutions for e-commerce. Select one of the
areas below to learn more.
Source: http://www.northerntrust.com/corporate/treasurymanagement
Cached File: 